Life-insurance companies have uncovered 20 000 fraudulent claims worth R1-billion over the past four years, the Life Offices’ Association (LOA) said on Wednesday.
However, ”The industry settled valid death and disability claims worth more than R19-billion last year,” said Gerhard Joubert, chief executive of the LOA.
The LOA represents about 95% of insurance companies in the country.
Joubert said material non-disclosure and misrepresentation were the most common reason claims were fraudulent. There were 1 369 cases of material non-disclosure valued at R143-million, and 805 cases of misrepresentation to the value of R69-million last year.
”Since life companies usually detect material non-disclosure and misrepresentation, it is far better for policyholders to pay the appropriate premium and have certainty that their death or disability benefits will be paid out when they die or become disabled,” he said.
However, only 2 844 fraudulent claims were recorded last year, the lowest number since 2003.
Life companies have also clamped down on cases involving criminal intent and fraudulent documentation, with a drastic decrease from 1 710 cases worth R79-million in 2003 to 459 claims worth R21-million last year.
”Heightened awareness … on the part of claims assessors and forensic divisions are the likely reasons for this successful reduction in fraud,” says Joubert.
Geographically, the highest number of fraudulent claims was submitted in KwaZulu-Natal, followed by Gauteng and then the Western Cape.
He said the lengths to which some policyholders went to defraud life companies were astounding.
One policyholder is in jail for having submitted three fraudulent disability claims. He was caught out while submitting the third one.
Joubert said the man studied his mother-in-law, who had suffered a stroke and was wheelchair-bound, and successfully pretended that he had also suffered a stroke and was left paralysed.
”He did this so well that he even fooled a top neurologist into believing that he had indeed suffered a stroke,” he said. — Sapa